Search smh:

Search in:

Retail bounces as budget blues wear off

Belinda Merhab

Retail spending is on the road to recovery as consumers shake off the federal budget blues and rug up as winter finally hits.

Retail trade figures for June have beat economists' expectations with spending rising 0.6 per cent, driven mainly by sales of household goods, clothing and footwear.

Economists say cold weather - which finally hit in June after a slow start to winter - and mid-year clearance sales, encouraged shoppers to start splashing their cash again, resulting in the biggest rise in retail spending since January.

Consumer confidence was also recovering from the shock of the May budget, which outlined a raft of tough spending cuts and tax hikes.

Advertisement

The positive figures from the Australian Bureau of Statistics on Monday come after a string of retailers including outdoor clothing chain Kathmandu, Bonds owner Pacific Brands and Super Retail Group (owner of Rebel Sports and Boating Camping Fishing) issued profit warnings because of the slow start to winter.

"It seems consumers were putting off purchases until the cold snap hit in June," said Margy Osmond, chief executive of the Australian National Retailers' Association.

"It is also likely mid-year clearances helped spur sales for the discretionary spend category this month - where household goods, clothing, footwear and accessories and other retailing all recorded rises."

"While we had anticipated a decent bounce back in sales in the month, we cautioned that this was likely to largely reflect some correction following a particularly weak period in the aftermath of the commonwealth 2014-15 budget and hit to consumer confidence coupled with an unusually warm May," she said.

"The outcome for June was encouraging, but we do not see this as a start of a strong trend in consumption amid numerous headwinds including more modest income growth, a patchy labour market, tighter fiscal stance, and lacklustre confidence (despite some recent improvement).

"A stronger housing market will assist but we remain of the view that household consumption will likely stay sub trend in 2014 and 2015."